The July 2021 OECD Statement on a Two-Pillar Solution provided that the Pillar Two GloBE rules have the status of a ‘common approach’. This means that members of the Inclusive Framework (IF) are not required to adopt them (ie they are not compulsory), but, if they do, they need to implement and administer them in a way that is consistent with the outcomes provided for under Pillar Two.
In addition, members of the IF are required to accept the application of the GloBE rules applied by other members, including (crucially) agreement on the rule order and the application of any agreed safe harbors.
If jurisdictions do want to implement the GloBE rules, both the Income Inclusion Rule (IIR) and Under-taxed Payments Rule (UTPR) will need to be implemented through domestic legislation.
The Subject-To-Tax Rule (STTR), as a treaty-based rule, can only be implemented through bilateral negotiations and amendments to individual treaties or as part of a multilateral convention.
The OECD provides that members of the IF that apply nominal corporate income tax rates below the STTR minimum rate will implement the STTR into their bilateral treaties with developing country members of the IF when requested to do so.
A model treaty provision to give effect to the STTR is planned be released in 2023, along with a multilateral instrument for its implementation.
The original timeframe was that Pillar Two should be brought into law in 2022, with the IIR coming into effect in 2023 and the UTPR in 2024.
The OECD published Model GloBE rules in December 2021 and Commentary in March 2022.
On December 20, 2022, the OECD issued the Safe Harbours and Penalty Relief: Global Anti-Base Erosion Rules (Pillar Two), which includes details of two safe harbours and penalty relief for the Pillar Two GloBE rules.
| Country | GloBE Country Guide | Legislation | Analysis |
|---|---|---|---|
| United Kingdom | United Kingdom | Finance (No. 2) Bill for the ‘Multinational Top-Up Tax‘ in March 2023. | Review of the UK Global Minimum Tax in Yesterday’s 2023 Spring Finance Bill UK Proposes Amendments to Global Minimum Tax Rules |
| South Korea | South Korea | On December 31, 2022, South Korea passed Law 19191 to amend the International Tax Adjustment Act to provide for the Pillar Two Global Minimum Tax from January 1, 2024. On July 22, 2022, South Korea released a draft law to implement Pillar Two. | First Domestic Pillar Two Global Minimum Tax Law Enacted Analysis of South Korea’s Draft Pillar Two Law English Translation of South Korean Pillar Two Law |
| Mauritius | – | The Finance (Miscellaneous Provisions) Act 2022 which implements provisions of the 2022 Budget in Mauritius includes mention of a qualified domestic minimum tax for Pillar Two purposes. | Mauritius 2022 Finance Act includes Pillar Two Top-Up Tax |
| Switzerland | Switzerland | On August 17, 2022, the Swiss Federal Council issued a draft decree for the implementation of Pillar Two. On May 24, 2023, Switzerland issued an updated Draft Decree for the Pillar Two Global Minimum Tax. | Analysis of Switzerlands Draft Pillar Two Decree Direct Transposition of the GloBE Rules: Different Approaches By Switzerland & New Zealand Switzerland Issues Second Consultation on the GloBE Rules |
| EU | – | The European Commission released a proposed directive based on the model GloBE rules on December 22, 2021. On December 15, 2022, the Council of the European Union formally adopted the EU Pillar Two directive. Member states will have to transpose the directive into national law by the end of 2023. On December 22, 2022 the EU Global Minimum Tax Directive was published in the EU official journal as Council Directive (EU) 2022/2523 of 14 December 2022. Date of entry into force: 23 December 2022. | Full Steam Ahead For EU Pillar Two Implementation Review of the Draft EU Pillar Two Directive Poland Withdraws its Veto and the EU Pillar Two Directive is Adopted |
| The Netherlands | Netherlands | The Netherlands Published draft legislation for Pillar Two on October 24, 2022. | Key Takeaways From the Dutch Draft Pillar Two Legislation |
| Indonesia | – | On December 20, 2022, Indonesia issued Government Regulation No. 55/2022 on the Adjustment of Regulations in the Field of Income Tax. This included reference to the implementation of a global minimum tax in Indonesia as well a a desire to implement Pillar One. | Indonesian Regulation Signals Global Minimum Tax Implementation |
| Sweden | Sweden | On February 7, 2023, the Special Investigator submitted the interim report on the proposal for the implementation of the Global Minimum Tax Directive to the government. This includes outline draft legislation which mainly corresponds to the EU directive but is adapted to Swedish conditions. | See our Review of the Draft Swedish Global Minimum Tax Law |
| Japan | Japan | On March 28, 2023, Japan enacted a domestic law to give effect to the Pillar Two GloBE rules from April 1, 2024. On February 3 and 6, 2023, the Ministry of Finance published the “Bill for the Partial Revision of the Income Tax Act”. This includes the implementation of the Pillar Two GloBE rules from April 2024. | Japan’s Global Minimum Tax Law Is Enacted GloBE Country Guide: Japan |
| Germany | Germany | On March 20, 2023, the German Federal Ministry of Finance published a consultation, including a draft law (the Minimum Taxation Directive Implementation Act), to implement the EU Global Minimum Tax Directive. | Germany Publishes Draft Global Minimum Tax Legislation |
| Liechtenstein | Liechtenstein | On March 29, 2023, Liechtenstein published draft legislation for the implementation of the Pillar Two Globe Rules. | Liechtenstein Publishes Draft Global Minimum Tax Law |
| Ireland | Ireland | On March 31, 2023, the Irish government issued a Feedback Statement on the Pillar Two Global Minimum Tax. It includes draft legislation and outlines possible draft legislative approaches to key elements of the GloBE Rules. | Ireland Issues Draft Global Minimum Tax Law For Feedback |
| New Zealand | New Zealand | On May 18, 2023, New Zealand published a draft law (the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill) to implement the Pillar Two Global Minimum Tax. | New Zealand Issues Draft Global Minimum Tax Law Direct Transposition of the GloBE Rules: Different Approaches By Switzerland & New Zealand |
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